Lending, membership growth lead historic credit union performance

Lending and membership growth a trend of historically strong performance for credit unions according to the August Monthly Credit Union Estimates from CUNA.

“The most recent monthly estimates show that membership and loan growth grew 0.60% and 1.01%, respectively, in August,” said Jordan van Rijn, CUNA senior economist. “This continues the very strong pace of credit union growth. If credit unions continue at this pace, we would see annual membership growth of over 5 percent, and double-digit loan growth for the fifth straight year. Neither of those events have occurred since the 1980s.”

“The average credit union fixed-rate mortgage rate is now at 4.32 percent, up from 4 percent a year ago, and up from a post-recession low of 3.79 percent in September 2016,” van Rijn said. “However, mortgages rates remain relatively low and still well below rates in the mid-2000s, when average fixed mortgage rates were well above 6 percent. While all major categories of mortgage loans grew in August as rates continue to rise, it is likely that credit unions will see a decline in mortgage demand, particularly for home equity lines of credit and other second mortgages.”

Auto loan rates are also increasing and reached averages of 3.56 percent for new auto loans and 4.10 percent for used auto loans, up from 3.06 percent and 3.75 percent, respectively, one year ago. “However, auto loan demand tends to be less sensitive to small changes in interest rates, and credit unions continue to experience strong auto loan growth as a result of the robust economy,” van Rijn said.

Credit union savings balances increased 1.4 percent in August. Share drafts led savings growth during the month, rising 6.6 percent, followed by one-year certificates (1.4 percent), money market accounts (0.6 percent), and regular shares (0.03 percent).

As the Federal Open Market Committee continues to raise the Fed Funds rate, we see a parallel trend in the rising credit union loan and deposit rates,” van Rijn said. “Six of the ten major interest rate categories that CUNA tracks increased in August, with the other four remaining unchanged.”

Credit unions’ 60-plus day delinquency remained at 0.7 percent during August.

The loan-to-savings ratio declined to 84.5 percent in August from 84.9 percent in July. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) increased to 13.3 percent in August from 12.5 percent in July.

The movement’s overall capital-to-asset ratio declined to 10.7 percent in August from 10.8 percent in July. The total dollar amount of capital increased 0.8 percent to $157.4 billion.